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American Horse Council's Tax Bulletin

AHC’s June 2014 Tax Bulletin includes topics on tax bills moving to the House, a tax court dispute and FBAR Enforcement.

June 30, 2014

American Horse Council

Download AHC's June 2014 Tax Bulletin today!

The American Horse Council’s June 2014 Tax Bulletin is available for download. The June 2014 Tax Bulletin includes a variety of topics – tax bills moving to the House, a tax court dispute and FBAR Enforcement.

Several tax bills favorable to the horse industry are moving in the House.

By Thomas A. Davis, Esq., Davis & Harman LLP of Washington, D.C.

Over the past several weeks, the Ways and Means Committee passed and sent to the House floor three tax bills beneficial to horse owners and breeders, and has a fourth bill under consideration. As discussed below, the bills retroactively restore tax benefits that expired at the end of 2013.

As AHC Tax Counsel Thomas "Tad" Davis reported in the last AHC Tax Bulletin, an owner-breeder, for the first time, has prevailed in a "passive loss" decision, handed down by the U.S. Tax Court in April 2014 (Tolin v. Commissioner, T.C. Memo. 2014-65).

As a long-time member of the AHC Tax Bulletin Advisory Board and the attorney of record in Tolin, I have been invited to elaborate on its more significant findings. As Tad Davis noted, this is likely the most significant decision dealing with a horse operation in the three decades, since the "passive loss" rules of Internal Revenue Code Section 469 were enacted. For so-called "passive" activities, the penalties can be harsh, often resulting in total disallowance of all losses derived from the horse operation for many years, at least until the horse operation is completely terminated.

By B. Paul Husband, Esq., Husband Law Group of Universal City, California

Unlike most countries, the United States taxes the worldwide income of its citizens and other residents, not just income earned within its borders. Two of the most significant Internal Revenue Service Programs in assuring that the U.S. Government has sufficient information to effectively tax foreign income are the Report of Foreign Bank and Financial Accounts, which is commonly called the FBAR, and the Foreign Account Tax Compliance Act commonly known as FATCA.

The American Horse Council keeps you up to date with electronic the Tax Bulletin that reports on Congressional action and other important issues affecting the industry. The Tax Bulletin is a member benefit, and thus, is not intended to reproduction. For more information on federal legislation, equine health and regulatory issues, taxes, animal welfare, racing, recreation, and showing please visit our website at www.horsecouncil.org

For more information on the American Horse Council or to view the 2014 June Tax Bulletin, visit www.horsecouncil.org.

About the Association

The American Quarter Horse Association, located in Amarillo, Texas, is the world’s largest equine breed registry and membership organization.

AQHA members share a passion for the American Quarter Horse and the vast lifestyle created by the world’s most popular horse.

Whether you’re a seasoned horse show veteran, a fan of the race track, a backyard horse enthusiast or simply someone dreaming of someday owning a horse, AQHA membership will benefit you in countless ways.